Regulatory overreach, not just cheap natural gas, is killing coal

Coal is piled high at the Big Brown power plant near Fairfield, Texas.
David J. Phillip
AP

A decade ago, America’s coal industry was prospering, providing about 60 percent of America’s electric power generation and exporting growing volumes of both steam and metallurgical coal to Asia and Europe.

By contrast, coal-fired generation today accounts for less than one-third of the electrons on the power grid, while dozens of companies are in bankruptcy, thousands of high-wage jobs have been lost and exports have declined dramatically.

To make matters worse, President Barack Obama has halted all new coal leasing on federal land and environmentalists have succeeded in blocking seven proposed West Coast export terminals that could have handled more than 125 million tons of coal annually.

Without question, cheap and abundant natural gas — thanks to the shale revolution — has contributed to the decline of King Coal.

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But a growing pile of federal regulations from the Environmental Protection Agency and other government agencies has been just as significant, perhaps even more so.

The Mercury and Air Toxics Standards and the Clean Power Plan are but two examples of the administration’s attempt to phase out the nation’s use of coal, and both are being challenged in the courts.

The MATS rule, finalized in late 2011, requires a 90 percent reduction in coal’s mercury content, an 88 percent reduction of acid gas emissions and a 41 percent drop in sulfur dioxide within four years.

Though the legal battle continues over whether the EPA properly weighed the costs and benefits when drafting the regulations that the agency itself acknowledges to be the most expensive rules ever promulgated, a recent decision by U.S. Supreme Court Chief Justice John Roberts has allowed the rules to remain in effect.

So far, according to Department of Energy data, 20 gigawatts of coal power have been retired as a result, more than four times the amount projected by the EPA.

The Clean Power Plan, which has been opposed by 24 states — including Texas — and various energy producers, mandates a 32 percent reduction in carbon dioxide emissions from power plants within 25 years, relative to 2005 levels.

In February, the Supreme Court issued a stay on the regulations pending the outcome of litigation in lower courts.

The litigating states claim the EPA is pursuing an agenda to “eliminate coal-fired power plants … by virtue of an impossibly high technology standard.”

In fact, the CO2 reductions mandated by the CPP would require combining expensive technologies that are currently not in use anywhere in the world.

What’s more, there appears to be a clear political bias in the state-by-state CO2 reduction targets established under the CPP.

The states with the smallest proposed reductions voted 75 percent Democrat in the 2012 election while those with the greatest burden voted 66 percent Republican.

The Obama administration and EPA pretend that their efforts to roll back the coal industry don’t exist.

They are quick to point toward cheap natural gas as the cause of the coal industry’s decline.

Yet make no mistake, their actions to manipulate the electricity marketplace have been crippling.

With one new rule or regulation accumulating on top of another, they’ve rigged the game.

It’s as if they’ve told Tom Brady he can play but he’s not allowed to throw down the field.

When he inevitably loses, the Obama administration takes no blame and rather suggests the opposing defense was too good.

Heavy-handed government regulation to reduce CO2 is a terrible mistake. It’s an emissions reduction model the world — particularly the developing world — cannot replicate.

We are sacrificing our own coal industry, the good jobs it supports and the affordable energy it provides for emissions cuts here that are likely to be overwhelmed by rising emissions overseas.

Instead of relying on regulatory fiat to reshape our energy marketplace, we should continue to trust technology and competition to achieve the nation’s environmental goals.

Even more worrying, the ongoing battle against coal could also become an assault on natural gas if, as expected, the government sets stricter — and unrealistic — carbon reduction goals in the years ahead.

Bernard L. Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics in the Cox School of Business at Southern Methodist University.